A funding rate is a small fee perpetual futures traders pay each other on a schedule to keep the price near spot. An extreme rate means one side is paying a lot to stay in.
What positive and negative funding mean
More traders bet up than down. The fee pulls the price back toward spot.
More traders are betting down. The perpetual trades a little below spot.
The rate is tiny but charged every few hours, so it adds up. Its sign shows the crowd's lean and its size shows how hard.
Why an extreme reading matters
Deeply positive funding does not call a top. It shows many leveraged bets on a rise, each paying to stay open. If the price falls far enough those bets are closed by force, which is how a liquidation cascade starts.
Deeply negative funding is the reverse: many bets on a fall. On our record a funding extreme did not tell which way the price went next: what we measured.
Funding is context, not advice. It tells you how the crowd is positioned, not what to do. Past outcomes do not ensure future results.
Why compare exchanges, not just one
Each exchange sets its own rate, and one running hot may be only its own crowd. When many exchanges stretch the same way at once, the positioning is market-wide.
How to read it in practice
- Open the funding panel. The terminal shows each exchange's funding side by side. Funding extremes lists the most stretched coins right now.
- Compare exchanges. One hot exchange may be only its own crowd.
- Add liquidations. The liquidation map shows the prices where those crowded bets get closed by force.
- Set an alert for when funding reaches an extreme.
Checking the record
Every signal is scored on what price did next, hits and misses alike, on the public track record.
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